Selling Your Guns

By
Bob Pagano

For most of us; a day will come when we have to turn some or all of our gun collection into cash. It may be a divorce, or a mother in law coming to live with us, or the IRS is no longer humored by our delays. It may be one gun that we just don’t use anymore or our whole collection. It might even be that a friend’s widow has asked us to sell her late husbands collection. For those who’ve invested in firearms as part of their retirement strategy; the ransacking of Social Security makes maximizing the return more important than ever. There are quite a few options and knowing the lay of the land before starting out can make a huge monetary difference at the end of the journey. Also: old boxes, sights, ammo, accessories, accoutrements, military gear and other related items can yield a good deal of money and it’s important not to just “throw them in” with the firearms.

Having navigated this terrain for decades, I’ve learned where many of the pitfalls are and thought I’d share some of my humble insight with you.

A note on estates: If you’re asked to help with an estate the first thing to do is advise the family to let you handle it completely and not dispose of any of the firearms or related items themselves. Widows and children are frequently approached by “friends” who tell them things like “John always said I could have first shot at this gun. It would mean so much to me.” Some “collectors” also close in on the bereaved and give them cash on the spot. Prices paid usually don’t even approach the true potential and the collection gets “cherry picked” leaving only the low value items once the dust settles. Sadly, this is a common occurrence.

First, one has to identify the item. That may seem obvious but it can mean the difference between a few dollars and a great many dollars. You can present it as your grandfather’s old deer rifle and get $250 or describe it as a pre-war Winchester model 70 in 7X57 Mauser and bring in ten times that. Just listing what the manufacturer wrote on the firearm is not sufficient. One small feature or variation could quadruple the value. Over the past 45 years I’ve seen many high value guns traded for peanuts because the sellers hadn’t identified them fully. To an untrained eye a high value variation can look identical to a low value version. While well worth it, proper identification can be difficult or impossible without the right reference material. In many cases the best reference material is in itself a rare and expensive item (you won’t get close to a copy of Roger Rule’s book on the model 70 for under $100 and can pay more than three times that for excellent condition copies). You can try your local library or see if friends have what you need.

All this is aimed at determining value. Most people will reach for one of the books on gun values and learn that generally, value is driven by condition and rarity. With the proper reference material rarity is a fairly easy thing to determine (more on that later) but condition is another matter. Good is better than poor and excellent is better than very good, right? Well, yes but what are the demarcation points between them? One persons “good” might be another’s “very good” or someone else’s “poor”. The guidelines for selecting a condition category are somewhat vague and ultimately, subjective. There are a number of different “systems” for qualifying condition and they don’t necessarily jive or translate. It’s no wonder that the various books on gun values don’t agree with each other on pricing by substantial amounts. Know that the price listed is someone’s opinion, not definitive and at best can give you only a relative sense of value.

The definition of value in Webster’s is: “The monetary worth of something: MARKET PRICE.” The key word is “market”. To state it another way: The market is the final arbiter of value. Value (or price) varies widely depending on the market an object is offered in and choosing the market will be the single most important decision you make.

For example: For years this item was offered at gun shows for $25 and never sold. Offered in the right market it brought $430 in only 10 days. (It’s a Long Range Kit – vintage reloading gear of the kind Quigley would have had in his saddle bag.) Both values were correct. It was not worth $25 in one market and it was worth $430 in the other market. Hmmmmm.

The various markets:

Private sale to an individual:
If enough friends and acquaintances are asked; almost certainly someone will be interested and a quick sale can be made. A quick sale is nice; realizing only a fraction of the potential value is not. The market size is tiny so competition for your property will be tiny. Frequently, personal issues will be dragged into the matter like: “Hey, remember that favor I did you? Return it by giving me a break.” Also: gun laws vary considerably by region and you might inadvertently break a local, state or federal law and wind up in trouble.

Private sale to a collector:
If a quick sale is your only goal then consider this route. It is a tiny market and collectors want to pay the bare minimum so while they may know the true market value of it – they won’t tell you if they sense that you don’t. Legalities are a factor here as well.

Classified ads:
Accessing a larger market is always better. However; you are broadcasting the fact that firearms are at your location and while you may only give a phone number, a quick internet search will reveal the address. At some point you will be meeting unknown persons who may not be of the highest caliber. Legalities are a factor and you’ve advertised your intention to any authorities that may be interested.

Gun Stores:
Consider “shopping” with dealers. This has the advantages of a quick sale, assurance that all laws will be adhered to and you don’t have to deal with the public. They will go up to as much as 80 or 90% of what they think they can sell it for if it is a highly collectable (spell that: “very valuable”) arm. For most guns, dealers will usually offer between 40 and 60% of what the market will bear in their locale. They have to have some “room” in the deal to offset the fact that they may be tying up their money for quite awhile and their overhead items such as taxes, licensing fees, rent, payroll, insurance, utilities and the like. Keep in mind that their offer may well be higher than those from individuals even with the “room” they have to have. All that considered; a dealer’s offer is almost always fair, honest and worth it because of the protection it offers you - there’s no worries about the sale coming back to haunt you as it could with any of the previous methods listed and chances are good that you’ll get more than a private sale.

Another approach with a dealer is to have him take it on commission (not all dealers do this). The gun(s) remain your property until sold and you will receive a percentage of the sell price. The pricing issue is better here as dealers know what the traffic will bear in their region. (Pricing will vary from region to region.) You’ll have to wait for the right buyer to appear and that may take a long time. Dealers usually charge between 20 and 40% for this service and there may be a charge if the item doesn’t sell in a given time period. Advantages are that you will have informed help in setting the price, you won’t have to deal with the public and legalities will be properly dealt with.

Auction Houses:
As with consignment sales through a dealer: your gun(s) remain your property until they are sold and you receive a percentage of the sale price. Consider only firearms specialty auction houses. First: they advertise in firearms publications and will draw the right bidders. Second: they are experts at identification and condition determination. They will present features and history that may distinguish the gun as a rare variation that frequently, the owner wasn’t aware of. They are paid a percentage of the sale price so they have a vested interest in identifying and presenting any information that will increase it. They have experience and access to vast libraries of research material while the average shooter, dealer or collector doesn’t. Third: auctions put buyers in a competitive situation. Forth: the market reached is quite large. Finally: the legalities will be dealt with properly.

Commission: most auction houses charge the seller (consignor) between 10 and 40% of the sale (or hammer) price. They also charge the buyer (bidder) a percentage called a buyers premium. This 15 to 25% premium is added on to the buyers invoice. Knowing this; buyers make their top bid lower by that percentage which in turn lowers the hammer price by that percentage. It works out this way: You negotiate a 20% commission with the auction house. The auction house terms for bidders includes a premium of 20%. At auction, a bidder thinks your item is worth $120 and knowing of the buyers premium of 20%, will stop bidding at $100 ($100 + 20% = $120). It sells for $100, the auction house takes, 20% commission ($20) leaving you with $80. The auction house bills the buyer $100 + the buyers premium of 20% for a total of $120. You net $80; the auction house nets $40. The auction house realized 40% on the sale and, ultimately, you were out that 40%. No one’s cheating anybody and the auction houses don’t conceal the fact that they charge a buyers premium. I note it here because many consignors don’t realize that the buyer’s premium has a direct impact on the hammer price and in turn on the consignor’s income. Add the commission rate you’ve negotiated to the buyer’s premium to understand the true percentage you’ll be leaving on the table.

There are other more complex schemes that involve a sliding scale of commission rates. It may be structured like this: 0-$300 @ 30%; $301-$1,500@ 25%; $1,501-5000@20%; 5001+@15%.

There might be additional fees for photography, cleaning, storage, advertising, etc, that can significantly reduce the amount of money you get in the end. Be sure to ask. It may look like a lot of smoke and mirrors and you’ll have to wade through it to make sure you understand.

Reserves: Frequently, sellers (consignors) will want to put a minimum price on their item - a reserve. Reserves can do more harm than good. The uninformed pricing issue is now in the picture and if the reserve is too high (usually the case) no bids will be forthcoming. In that case most auction houses will charge you a percentage of the reserve price and you are now in negative dollars. I’ve seen countless examples of where an item didn’t meet the reserve (didn’t sell) and was later re-listed with no reserve eventually selling for far above the original reserve price. While that doesn’t seem to make sense; it is a reality of the auction world.

You may do better using a firearms specialty auction house rather than the methods reviewed before but you must carefully shop and review the terms and then persistently negotiate.

Firearms specialty consignment sales companies.
These are not auction houses but operate in much the same way. They too have vast research materials, in-house photography facilities, advertise in shooting specific publications, make potential buyers compete to buy your item and take care of the legalities. They also work on a commission basis so they have a vested interest in presenting your item in a manner that will bring the highest price. They clean, research, photograph and write exacting descriptions. They analyze the market to determine the best timing and venue in which to present your item. Possible venues can include their own internet store or auction site or other auction sites (like Gun Broker or Auction Arms). They include additional services (auction houses usually don’t clean or otherwise prepare your item), reach a larger market and charge less total commission. Because they don’t have the overhead an auction house does (a large facility & the employees necessary to staff it, etc) consignment sales companies don’t charge a buyers premium which results in more money in your pocket. While a consignment sales company might charge you a 25% commission and an auction house only charge you 20% remember that the auction house is also charging the buyer a premium (as much as 25%) resulting in a lower hammer price and a lower pay-out to you. Let’s take the example used earlier and contrast it with a consignment sales company scenario:

Auction house: your item is worth $120 but sells for $100 because the bidders are burdened with a 20% buyer’s premium. The auction house charged you a 20% commission and the buyer a 20% premium netting $40 for itself. The pay out to you is $80.

Consignment sales company: Because there is no buyer’s premium your item sells for $120 and the consignment sales company operating at 25% commission nets $30. The pay out to you is $90.

While you paid a 5% higher commission rate with the consignment sales company than you did with the auction house, you realized 10% more money in the end. Usually, the commission is all-inclusive with no extra fees of any kind. With a consignment sales company it is far easier to understand what you’ll be getting - no smoke, no mirrors.

Another plus it that firearms specialty consignment sales companies will pay close attention to your non-firearm items and market them vigorously. In any of the other sales methods only scant attention will be paid to marketing these items if any is paid at all. Through expert marketing consignment sales companies can bring in significant money for items that other sales vehicles don’t want to be bothered with.

Of course, you could always take a whack at a “do it yourself” internet vehicle (Gun Broker, Auction Arms, etc.) but the significant problems of identification, pricing and legalities are present. Outfits that do it professionally are just that: professionals. They know how to research, prepare, photograph, describe and time presentation to gain maximum interest. That computes to more competition and higher sale prices which will more than offset the commission fee by a significant amount.

An important note: Folks usually clean an item before offering it for sale. Limit your cleaning to the normal maintenance routine you perform. DON’T remove rust, polish, re-finish, paint, grind, file, fix, re-blue or anything else. Re-bluing a 100 year old rifle will make it look better but can chop its value by more than half. Buffing the patina off a 1911 two-tone magazine will make it shine but knock its potential from over $200 to under $20. Professionals know how to clean properly and will do so to the point of improving appearance without diminishing value. Leave it to them.

Bob Pagano is a Director of GO-NH, Treasurer of the GO-NH Shooting Sports Committee, member of the Council of Advisors to Pro-Gun NH, NRA Endowment Member and owner of Tango Yankee, LLC.